It seems like ages ago when Xobni’s founders, Adam Smith and Matt Brezina, were in Cambridge during YC’s summer ’06 funding cycle. We funded them on the premise that they were going to “make email better.” They’ve been working in stealth mode since then, but it seems like the Xobni guys will deliver on their claim.

This week, Xobni launched an invitation-only beta of its first product, Xobni Insight, at the TechCrunch40 conference.

Whew-- it’s so exciting to finally be able to talk about Xobni. Their product has been in the pipeline for a while but had to be kept under wraps. It’s not a web app; it’s integrated with Outlook, so it took them a long time to write.

Xobni Insight mines your email for the relationship information hidden in it. Among the cool features: when you search for someone, their profile appears in the sidebar with contact information. It also gives you a history of your correspondence with them.

Maybe making life better for Outlook users doesn’t seem like the sexiest problem to work on, but there are a lot of them and their lives aren't so great. (I was once one of these people. Ugh.)

Fred Wilson wrote, “I realize that many of you don't use Outlook anymore and have moved on to Gmail or some other better way to do mail. But for those of us stuck in email hell in Outlook, Xobni is showing a way out...”

It also got kudos from Matt Marshall of VentureBeat: “We’ve downloaded it, and are playing with it, and find it truly impressive.”

Simultaneously with building the first version of the product, Adam and Matt had to deal with growing the company. They raised funding from an impressive group of investors: Khosla Ventures, First Round Capital, Atomico Investments, Baseline Ventures and several angel investors.

Last April, they brought on Gabor Cselle, a software engineer they lured away from Google. He’s a formidable hacker: the kind of employee #1 that startups hope to get. They’ve since brought on several other employees and moved into hip (but not too expensive!) new office space in San Francisco.

But most importantly, with the launch of Xobni Insight, they seem to have made something people want. And I couldn’t be happier for the Xobnis.

I’m always a bit depressed after the last dinner of the funding cycle. In years past, I’d plan a vacation starting the next day—just to distract myself from being sad. I wind up liking the founders so much that I feel like an empty nester once the weekly dinners end.

We have a bench signing tradition, where each founder signs the bottom of one of our benches at the last dinner.

But this summer was slightly different. The day before the last din, I was already preparing to be sad and was talking to Paul about it. I realized that this time the cause was not just because I’d miss everyone but something more: based on past experience, I knew some of the startups would die over the next several months.

I don’t mean I was bummed from an investment perspective. We’re in the seed funding business; we don’t expect all of our investments to pan out. It was the founders that I couldn’t help thinking about.

Most take funding from us and show up with grand ambitions. They beaver away for the next 3 months and get swept up in this amazing wave of excitement, achievement, and sense of invincibility.

But startups are hard. If they weren’t more people would do it. And it’s usually the next year that separates the wheat from the chaff.

That’s why I was so pleased that Paul decided to give a talk at the last dinner about how not to die. This topic may seem too grim to be introduced during such a celebratory night, but I think it was exactly the kind of thing the founders needed to hear. Because it could prevent them from making mistakes that inevitably lead to failure. For example, founders may not have control over market conditions, but they can decide whether or not they go to grad school. After 5 funding cycles, I’ve seen some predictors of early startup death and Paul hit them in his talk, which he posted online.

I suppose ultimately running out of money is the biggest reason for failure. But that’s a symptom of some other cause and doesn’t usually happen if you are doing things right. I think one of the biggest things that kills startups in the earliest phases is not focusing 100% on the company. Paul wrote, “If you find yourself saying a sentence that ends with ‘but we're going to keep working on the startup,’ you are in big trouble.”

You probably won’t make something people want right away. It will take so much perseverance on your part that if you put yourself in a situation where the startup is allowed to fail silently while you are (fill in the blank) [back at school] [consulting] or [working on another startup idea with a friend], then it probably will.

My favorite sentence was, “So if you want to get millions of dollars, put yourself in a position where failure will be public and humiliating.”

All this said, I don’t blame the founders if they try hard and fail. They of course have to pay their bills. Never having done it before, some people can find a startup too overwhelming.

Paul already warned everyone that “bad shit is coming;” and it probably is. But so is some really great stuff too. Like closing a funding round, launching, getting users, moving into your first office, creating something really useful, starting to be well known…

Though I’ll miss them, I can’t wait to see what the future holds for the summer ’07 founders. Good luck!

The gang gave us this digital picture frame, with photos of everyone to remind me of them. I'll treasure it!